Hello there, I need help in formatting the following assignment.
Assume that you are CIO. Prepare the analysis requested from Bob and be prepared to present it at the next executive monthly meeting.
Further instructions are in the attachment at the bottom of page two. Included is the case study the assignment is based on.
BPO and Cloud Computing(Due Week 3)
Bob Smith, CEO of Smith’s Information Services, Inc., was studying the replacement of the company's data center by an outside service. Smith’s Information Services, located in Lexington, Massachusetts, was in the midst of a corporate overhead reduction program. As part of this program, Bob had been assigned the task of reviewing opportunities in outside sourcing for data center services. He was expectinga report on this issue at the next executive meeting in three days.
Smith’s Information Services Cost Reduction Program
Smith’s Information Servicesis a $2 billion firm with sales in consumer information. It enjoyed high overall growth until fierce competition flattened sales and decreased profits sharply two years ago. Since then, corporate cost and overhead reduction efforts were widespread. The CIO was in charge of the data center and has been investigating the possibility of a business process outsourcing project that would move the data center to the cloud.
Data Center
The data center at Smith’s Information Services was created in the mid-1980s and has grown very rapidly. Mainframes were installed first, followed by AS400s, and then servers that were rack mounted. Disk storage, at one time, was at a premium, but has since gone down in price. Cooling for the data center has gone up as more and more servers and disks were installed. This cost, along with the electricity cost to run all of the devices in the data center,has Bob Smith worried that the cost of doing business is getting out of control.
Along with the rising hardware and software costs, the number of employees needed to run this data center has grown considerably. The cost of running a data center 24/7 is becoming rather large, and this is another issue that Bob Smith is concerned about at the moment. The growth potential for the organization is very positive, which means that more data will be stored, which will result in higher costs in all areas of the data center unless cost savings are found.
Outside Services
The CIO has felt that this was coming sooner or later, and has already been quietly investigating the idea already. There are many options from which to choose, including: a local data center, a well-known data center, and a data center that is located overseas. Each of these solutions has pros and cons, and one big issue is the security of the data. Some of the other issues include service-level agreements that have to be hammered out, HR issues that will deal with the local and remote staff members, and other issues, such as informing or not informing the customer that Smith’s Information Services will be outsourcing the data somewhere.
Deadline
The CIO’s job is to gather as much data as possible from outside sources, analyze the data, and then come up with the best choice. The deadline will be the next executive monthly meeting, which meets in two weeks.
Your Assignment:
Assume that you are CIO. Prepare the analysis requested from Bob and be prepared to present it at the next executive monthly meeting.
Submittal Format
Case Study 1 should be prepared in MS Word format. Any resources used beyond the ebook need to be cited in your document--Iincluding links to relevant websites. Your document shall be written as an executive summary clearly identifying your purpose, relevant data, decision-making/thought process, and conclusion. Your document will be your "go-to" plan for your outsourcing process. You need to quickly and succinctly understand the steps that you'll undertake for contracting. This means having minimal complete paragraphs, and instead, using bullet points or a simple table summarizing required action.
While this report should be fashioned as an executive summary, it does encompass the entire contracting process. As such, it shall be between 5 and 8 single-sided pages in length, using 10-point Times New Roman font, and 1.5-inch line spacing. The page requirements do NOT include any cover sheets that you may include with your report.
Grading Rubric:
Points Criteria
5 Correlation of the assessment with the TCOs outlined above and material covered through Week 3.
5 Compliance with format requirements outlined above.
20 Assessment of how each of the three (3) outsourcing alternatives impact your business decision and also whether or not it might be helpful or detrimental to your core business.
5 Assessment of any issues that may arise (both in the short-term and long-term) for each outsourcing alternative.
5 Assessment of the type of contract chosen for each outsourcing alternative. Provide a rationale for your choice.
5 Assessment of the evaluation criteria used to rank the proposals. Again, a rationale for your choice needs to be included.
5 Strength of argument on the number of vendors selected to provide the services.
10 Assessment/identification of the difference in timeline (if any) between the three outsourcing alternatives.
Total: 60
Purpose:
Smith Information Services, Inc. is in view of the substitution of the company's information center by an external service. Bob Smith is looking for potential ways of outsourcing to remain with the organization need of data expansion and also making certain that expenditure is in control and within satisfactory limit. The CIO of the corporation is inspecting the likelihood of a business process outsourcing project that may move the information center to the cloud. The data center has developed quickly and the expenditure linked with its expansion is mounting up yearly and the expenditure of doing business may get uncontrollable. Along with the increasing hardware and software costs, the employees required to run this information center which has mature significantly. The CIO of the corporation has been assessing three diverse options and is in the course of information gathering to recognize the merits and demerits of every alternative. There are a lot of options from which to decide, including: a local data center, a renowned data center, and a data center that is located abroad. Each of these resolutions has merits and demerits, and one chief issue is the safety of the data. Some of the further issues comprise:
- HR issues connected with local and isolated staff members
- Service-level concurrence
- Other issues, for example informing or not informing the client that Smith’s Information Services will be outsourcing the information somewhere.
Cloud computing is a way to augment capacity or capabilities on the go devoid of training new personal, endowing in innovative infrastructure, or licensing innovative software. This sort of server service is a grand for the reason that there are no compatibility issues; a Mac user way in the identical internet as a PC user.
Three different alternatives and evaluation of these alternatives
1 Local data center
Having the information center close to client is significant factor in gathering customers' needs and consequently local data centers are situated in the same nation as the client. Labor force may rapidly move back and forth among the on-site team and the local team. To participate more efficiently with local service providers, our corporation can conscript locally marketers, hired managers, and possible technical associates in neighboring centers. By establishing local data centers, our corporation can develop and improve the offsite replica. These local centers will permit close interface with the client and quick reply to a service request, being in the same location and time zone as the client.
Service-level agreements - Service-level agreements are vital in such outsourcing business. The client corporation and the outsourcer have got to know what to anticipate from each other. The excellence of the service-level agreements establishes the value of the connection between the client business and the outsourcer. A lot can take place during the life phase of a data center services agreement as people are reassigned to other projects, depart the corporation, or for promotion. Our corporation will need to know whose approval is necessary to fix escalations in information centre hosting. Will there be 24 hours services from the outsourcer’s workforce?
Safety of the data - Cloud computing has lot of concern regarding security. A isolated service supplier could be transferring information over public information infrastructure subjecting the corporation to information transfer risks. Virtualization poses threats, with records from diverse customers hosted on the identical server. Even though reasonable barriers might be in place, it’s easy to reach the finale that those obstacles are not as well-built as substantial barriers—mainly if a motivated hacker or other malicious party wishes to source you destruction. (Clark, 2012).
Timeline – Time zone would be the mainly expedient in going for a local information center service as the seller would be local and our corporation can closely network with the people in the vendor’s association. as of being in the same time zone, the subjects and escalations handling time can be significantly condensed.
Nos. of Vendors – In this case, if the outsourcing seller is quite renowned, it would make sense to go for a particular organization. This will also ensure that all of the information needs would be satisfied from one cloud computing infrastructure and the corporation doesn’t need to depend on two cloud hosting to accomplish its multi-functional information needs in case of manifold vendor cloud hosting. This will also make sure the seamless amalgamation of data among the vendor’s and our company’s arrangements.
1. Well-known data center
If our corporation opts for the well-known information centers, we might have committed servers dispensed just for our company first and foremost as of having a superior relationship with the vendor’s business. Dedicated servers are devoted to just corporation. Having devoted servers gives complete control to our corporation over the information and computer systems. The hardware for dedicated servers is held by the hosting contributor and thus can decrease overhead costs and augment our company’s earnings. It may be very beneficial for our corporation to have this sort of data hub as it will have the maximum degree of defense against unlawful access or any kind of interruption. This will also ensure that our company’s hosted data system would get active fire defense system and round-the-clock network examination. Information security from a well known data center provider is forever better compared to other types of Data center service supplier. Well known Data center service providers will supply all the common security measures: malware protection, physical site security, authenticated access, data encryption, and employee background checks. In the case of well known data center, the outsourcing provider can help the corporation reengineer access rules to constrict security or to respond to regulatory changes. Usually, the outsourcing providers have good contractual obligations to their clients and their power procedures are well recognized and imposed.
Timeline – Time zone would depend on whether the vendor is based in our country or outside US. In case of well known data center vendor, it might work out for our corporation even if the vendor is out of US. Having a superior relationship with the seller can reimburse for the fact that our corporation and the vendor’s business are based in two diverse time zones.
Nos. of Vendors – Nos. of vendors yet again would depend upon whether how many such cloud data center services providers are in superior relation with our corporation.
2. Data center located overseas
Organizations that outsource data center services abroad run a risk of getting poor excellence work. Offshore data center outsourcing sites might have limited technical capabilities, which leads to high-quality service being negotiated. Outsourcing abroad involves concealed costs, such as voyage expenses, infrastructure to supervise operations. Understanding the technical language and best practices of an association help to create tough working relationships. Our corporation would require evaluating and asking various questions prior to outsourcing offshore such as:
- How does one efficiently swap knowledge with the offshore data center?
- all the way through the transition how does one uphold business continuity, and what are the tax and lawful requirements?
- To get hold of utmost efficiency, data connected to which all process ought to be enthused offshore?
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- What talents and skills will the employees need and what is the best location for our data infrastructure needs?
Data privacy is progressively more becoming a worldwide concern. There is a widespread practice that when two corporation enter into a contract and each corporation is from a diverse country, we would require to specify in the agreement which legal arrangement governs the contract. The dispute becomes whether the other country will distinguish or implement such a clause.
Timeline – Time zone would be an subject in this case as the seller would be based outside US. This will lead to a extremely contracted interface between our workers and the offshore overseas vendor’s workers. This may require recurrent travel on the part of our workers which will add to the expenditure of contract and should be assessed while considering diverse options.
Nos. of Vendors – Nos. of vendors another time would rely upon whether the out of the country vendor has adequate and state of the art infrastructure to convene our information needs and provide information services 24hrs in a year.
1. Contract Types:
Data Center Outsourcing contracts can be of five types
- flat pricing
- Transactional pricing,
- Activity-based pricing,
- Cost-plus pricing
- Gain-sharing contract
To ensure that the ultimate outsourcing contract meets ones needs, our company should examine the pros and cons of each pricing model.
Fixed pricing – Fixed pricing agreement will have the price unchanging for the length of the contract. The work of the agreement would be restricted upon meeting the beleaguered performance levels in SLA agreements. The data center contributor will have the main responsibility to get the understanding the data categories by security, accurate data requirements, data accessibility and data safety in the case of the fixed-price model. Thus our corporation would be insulating from risks in the preset price replica.
Activity-Based Pricing Model - In this sort of contract, to cover up the outsourcing vendor's permanent costs, including equipment, rent, telecommunications and operating cost our company would disburse a flat fee. To cover changeable costs such as employee’s equipment maintenance cost, wages, daily operational cost, our corporation would pay a changeable fee. Some of the recompense of this type of pricing are that the operating expense incurred against the services are reproduced more specifically.
Cost-Plus Pricing Model - If the character of the contractual obligation is changing, then cost-plus pricing is predominantly efficient. Since our organizations are experiencing rapid changes, we might have requirements altering quite frequently. To keep cost under direct, service providers are assured a profit and procedures are establish. The demerits of this sculpt are that it could persuade the vendor to augment or show additional costs. So, from time to time the cost-plus is not measured a feasible long-term pricing sculpt.
Gain-Sharing Model - Another pricing category is the gain-sharing replica. This form of inducement for unremitting improvement is worthwhile regardless of the pricing constitution and in new relationships where the wisdom curve is the uppermost, gain sharing mechanism the best. It is beneficial because the seller benefits if the customer benefits. The drawback is that there is a lot of importances on value measurement since companies have to expand metrics to cautiously monitor value being produced.
2. Evaluation Criteria
Service level agreements is one of the most efficient way to measure the presentation of the information service source so both the parties' obligations in terms of anticipated workloads to performance measures ought to be evidently mentioned and approved upon. In the outsourcing contracting procedure, the subsequent areas ought to be assessed:
- Data accessibility and Data Volume
- emergency plans
- Risk evaluation and Data Risks
- Service provider location and right to use of information
Audit
- Data transfer velocity and data access speed
- Oversight and observance
In terms of performance, we would need to find out if the service provider has consistently performed good data services on similar projects. The work quality, data protection, and Infrastructure security issues should be ascertained through proper customer references. In such cases of outsourcing to external vendors, the risk of data breach or theft is much higher because our company would have far less ability to monitor and control processes and resources for handling of confidential information. By retaining sensitive data within our organization's own servers and providing limited access to the external/outsourcing vendor, the risks are somewhat minimize though not completely eliminated.
Pricing of the contract – Pricing should look into various parts of the contract requirement such as:
- Data Volume and Data Backup Data convey speed,
- , Network Uptime, Monthly Traffic
- Disk gap
- Firewall defense
- Customer Management Support
- Data contract Cost, Data accessibility and performance
Pricing will depend upon the type of the contract that we choose and this has been evaluated in the contract types section.
High availability - Availability refers to the capability of a data and system to access the arrangement by the client. Services should be accessible all the time together with some planned downtime according to SLA.
Technological capabilities - When considering these potential, we need to appraise and ask following questions: How is the communications of the corporation? Are they spending in infrastructure? By examining the corporation with these issues, we might have a high-quality idea whether risks deteriorated by outsourcing there.
3. Recommendation:
The data center at Smith’s Information Services has developed extremely fast. The growth prospective for the organization is extremely optimistic, which means that more information will be accumulated as our data requirements breed annually. Since the information need presently is altering and we are not sure of the information volume enlargement in the next 5 years, it may make more logic to prefer cost-plus pricing model. Some of the advantages of this pricing arrangement are that, in the case of changeable business levels, the seller is protected from losses and our corporation would also monitor to ensure that cost is within the adequate budgeted limit and this will help us to plan our enlargement and information cost appropriately next year.
References:
Clark. J. (2012). Risks of Outsourcing Your Data Center. The DataCenter Journal. Retrieved on dated 26th Jan, 2013 from http://www.datacenterjournal.com/dcj-magazine/risks-of-outsourcing-your-data-center/
Contractor, F.J., Kumar, V., Kundu, S.K., Pedersen, T. (2011). Global Outsourcing and Off shoring: An Integrated Approach to Theory and Corporate Strategy. Cambridge University Press.
Sparrow, E. (2005). A Guide to Global Sourcing: Offshore Outsourcing and other Global Delivery Methods. BCS.
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